Sattorfiold Mickoy Company has been job assignment is to prepare a cash budget f

Question

Sattorfiold Mickoy Company has been job assignment is to prepare a cash budget for April and for May 2018 monthly cash budgets since business activity slowed down a month or so ago You The following information has been provided April May $780,000 Revenue from sales Direct material purchases Direct labor Manufacturing overhead $700,000 233,000 175,000 136,100 195,000 140,625 165,750 Relevant information a All sales are on account bColectons are expected to be 50% n the month ofthe sale 35% in the first month folowing the sale, and 15% in the second month following the sale month following the purchase depreciation per month c F my percent (50%) of direct materials purchases are paid n cash in the month of purchase, and te balance due is paid in the d All othor tems listed above are paid in the month incurred except for selling and administrative expenses that includes $5,000 Other information 1 Credt sales for February, 5480 000, March $620,000 Save A 3 6 9 aW ERTY UOP S D FGHJK L

Explanation / Answer

CASH BUDGET FOR THE MONTH APRIL 2018 PARTICULARS AMOUNT AMOUNT Beginning Cash Balance $150,000 Add: Cash Receipts            Cash Sales in April ($700,000 x 50%) $350,000            Cash Receipt March Sale ($620,000 x 35%) $217,000            Cash Receipts February Sale ($480,000 x 15%) $72,000            Collection of Notes Receivable $45,000            Proceeds from sale of securities $15,000 Total Cash Receipts $699,000 Less: Cash Payments            Cash Purchase in April ($233,000 x 50%) $116,500            Cash Payment March Purchase ($194,100 x 50%) $97,050            Direct Labor Expense $175,000            Manufacturing Overhead $136,100            Selling and Admin Expenses $148,610 Total Cash Payments $673,260 Ending Cash Balance $175,740 CASH BUDGET FOR THE MONTH MAY 2018 PARTICULARS AMOUNT AMOUNT Beginning Cash Balance $175,740 Add: Cash Receipts            Cash Sales in May ($780,000 x 50%) $390,000            Cash Receipt April Sale ($700,000 x 35%) $245,000            Cash Receipts March Sale ($620,000 x 15%) $93,000 Total Cash Receipts $728,000 Less: Cash Payments            Cash Purchase in May ($243,750 x 50%) $121,875            Cash Payment April Purchase ($233,000 x 50%) $116,500            Direct Labor Expense $195,000            Manufacturing Overhead $140,625            Selling and Admin Expenses $160,750            Dividend Payment $12,000 Total Cash Payments $746,750 Ending Cash Balance $156,990

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